credit & debt

How to Opt Out of Forced Arbitration

Some Chase credit card holders will have a binding arbitration clause added to their card agreement. Here's what you need to know.

Heads up, Chase credit card customers: The issuer is adding a binding arbitration agreement to nearly all of its cards (excluding the AARP card)—but you still have time to opt out. Chase will soon bar cardholders from banding together in a class-action lawsuit against the company. Customers will have to settle disputes through arbitration—in which a third party privately makes a judgment—or in small-claims court. But if you send Chase a letter by the date specified in the notice you receive outlining the changes (dates vary and are in early August), you can preserve your right to join a class action.

Write a clear statement rejecting the arbitration agreement, and request a letter of acknowledgment from Chase. Include your name, account number, address and signature, too. Send the letter by certified mail (so that you can prove Chase received it) to P.O. Box 15298, Wilmington, DE 19850-5298. Customers who open a Chase card after the deadline can decline the arbitration clause, too.

About two-thirds of 30 large card issuers include mandatory arbitration in their agreements, according to CreditCards.com. Nearly half of those issuers let customers opt out by sending a letter within a month or two of opening the account, and all but two allow you to take an individual case to small-claims court.

Bank of America and Capital One are among large issuers that don’t require arbitration. But more issuers may start imposing it. In a settlement several years ago, some issuers—including Bank of America, Capital One and Chase—entered a moratorium on arbitration clauses, which has since expired, says Myriam Gilles, professor of law at Yeshiva University’s Benjamin N. Cardozo School of Law.

The ability to opt out of arbitration may not be as meaningful as it appears. Most customers won’t act on it, so “it’s more a way to soften the public-relations blow” for the company, says Lauren Saunders, associate director of the National Consumer Law Center. Plus, says Gilles, attorneys would be hard-pressed to pull together a class action with the consumers who do opt out.

TAKE OUR QUIZ: Will It Sink Your Credit Score?

Most Popular

Tax Wrinkles for Work-at-Home Employees During COVID-19
taxes

Tax Wrinkles for Work-at-Home Employees During COVID-19

Are your home office expenses deductible? How does going out of state to work for a while affect your tax picture? There are some interesting wrinkles…
November 9, 2020
Retirement: It All Starts with a Budget
personal finance

Retirement: It All Starts with a Budget

When you’re meeting with your financial planner, do you talk about your budget? If not, you should.
November 10, 2020
Will Joe Biden Raise YOUR Taxes?
taxes

Will Joe Biden Raise YOUR Taxes?

During the campaign, Joe Biden promised that he would raise taxes for some people. Will you be one of them?
November 10, 2020

Recommended

Strategies to Tackle Debt
Coronavirus and Your Money

Strategies to Tackle Debt

Millions of Americans facing furloughs and layoffs turned to credit cards to stay afloat. Here’s how to get out from under burgeoning balances.
November 24, 2020
Dear Mom and Dad: Thanks
Making Your Money Last

Dear Mom and Dad: Thanks

Ideally, living at home should provide a way to improve your financial well-being and lay the groundwork for future success.
November 17, 2020
Give Your Budget Some Love
Budgeting

Give Your Budget Some Love

Think of it as a flexible tool to prioritize—and achieve—your goals.
November 17, 2020
Financial Benefits for Military Families
Personal Finance for Military Families

Financial Benefits for Military Families

For Veterans Day, we run through benefits and programs meant to offset some of the financial risks service members take on. Also, hosts David Muhlbaum…
November 10, 2020